NikkoAM-StraitsTrading Asia ex Japan REIT ETF Announces Dividend Distribution Breakdown

13 January 2025 – Nikko Asset Management Asia Limited, the manager of the NikkoAM-StraitsTrading Asia ex Japan REIT ETF, has officially announced a dividend distribution for the period between 1 August 2024 and 31 October 2024. Shareholders will receive SGD \$0.0116 per unit, highlighting the fund’s commitment to delivering returns. Here’s what investors need to know about this announcement and its potential impact on share value.

Key Highlights of the Dividend Announcement

• The total dividend distribution per unit is SGD \$0.0116.
• The breakdown of the distribution is as follows:
  • Taxable Income Component: SGD \$0.0079948 from qualifying S-REIT distributions.
  • Tax-Exempt Income: SGD \$0.0011464, which does not need to be declared in Singapore tax returns.
  • Other Income and Gains: SGD \$0.0024588 from the disposal of securities.
  • Capital Component: No distribution under this category.

Tax Implications for Shareholders

Investors must pay close attention to the tax treatment of their dividend distributions:

• Qualifying Individuals: These individuals are not subject to tax on the S-REIT income component, provided the income is not derived from business or trading activities.
• Non-Qualifying Individuals: All other investors must declare the gross income distribution as taxable income in their 2026 Singapore tax returns unless exempt due to other circumstances.
• Qualifying Foreign Non-Individual Investors: A tax deduction of 10% applies to these distributions.
• Other Non-Qualifying Investors: A higher tax rate of 17% applies to their distributions.

Critical Considerations for Shareholders

For shareholders holding the ETF units as trading or business assets, the tax treatment of capital distributions requires particular attention:

• Capital distributions reduce the cost basis of units for calculating taxable trading gains upon disposal.
• If capital distributions exceed the original cost of the units, the excess will be treated as taxable trading income.
• Proceeds from subsequent sales of these units will be fully taxable.

Additional Notes

The Designated Unit Trust (DUT) scheme expired on 31 March 2019. However, the fund may still maintain its DUT status if it fulfills all the specified conditions and submits the required annual declaration form to the Inland Revenue Authority of Singapore (IRAS). Investors should consult the Pro Forma Singapore Tax Voucher for more details on taxable distributions.

Important Notice

Investors should note that the ETF’s performance on the Singapore Exchange Securities Trading Limited (SGX-ST) may differ from its net asset value (NAV). The ETF may also face risks such as suspension or delisting from SGX-ST. Additionally, units may only be created or redeemed directly by a participating dealer in large quantities, which could affect liquidity in the secondary market.

Potential Impact on Share Price

The announcement of the dividend distribution, coupled with its tax implications, could influence investor sentiment and potentially affect the ETF’s share price. Investors are advised to consider their individual tax circumstances and consult financial advisors to make informed decisions.

Disclaimer

This article is for informational purposes only and does not constitute financial advice. Investors should consult a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. Nikko Asset Management Asia Limited disclaims responsibility for any inaccuracies or omissions in the information provided.